WHAT MAKES

THE RETAIL KING

PROFILE OF SAM WALTON:

Sam Walton was an American businessman. In his early twenties, he began his training with J.C. Penney in Des Moines, Iowa. In 1962 he opened his first retail store,Wal-Mart, in Rogers, Arkansas. By 1992, he had more than 1,700. Unlike other discount retailers, he opened stores in small towns where there was little competition. At the time of his death, he was thewealthiest man in the United States.

Early Years:
A pioneering businessman who broke convention and showed that large discount stores could thrive in small, rural areas, Samuel Moore Walton was born March 29, 1918 in Kingfisher, Oklahoma. He was the first son of Thomas Walton, a banker, and his wife, Nancy Lee. Early in his life Walton and his family moved to Missouri, where he was raised. An able student and a good athlete, Walton quarterbacked his high school football team and was an Eagle Scout. Upon his graduation from Hickman High School in Columbia, Missouri, in 1936, his classmates named him "most versatile boy." After high school Walton University of Missouri in Columbia, where he graduated with a degree in economics in 1940.

Early Retail Career:

Following college, Walton got his first real taste of the retail world when took a job in Des Moines with the J.C. Penney Company, which was still a relatively small retailer. After serving as an Army captain in an intelligence unit during World War II, Walton returned to private life in 1945 and used a $25,000 loan from his fatherin-law to acquire his first store, a Ben Franklin franchise in Newport, Arkansas. In less than two decades, Walton, working with his younger brother, James, came to own 15 Ben Franklin stores. But frustration over the management of the

chain, in particular the decision to ignore Waltons push to expand into rural communities, prompted him to strike out on his own.

Building an Empire:
In 1962 Walton opened his first Wal-Mart store in Rogers, Arkansas. Success was swift. By 1976 Wal-Mart was a publicly traded company with share value north of $176 million. By the early 1990s, Wal-Marts stock worth had jumped to $45 billion. In 1991 Wal-Mart surpassed Sears, Roebuck & Company to become the countrys largest retailer. Walton was responsible for a lot of the success. His vision of a discount retail store in rural areas was accompanied by the founders hard-charging, demanding style. Walton, who often began his work days at 4:30 in the morning, expected results from those beneath him, and wasnt afraid to change course or reshuffle his personnel if he didnt like the numbers that came back to him. Even in the grips of a recession, Waltons stores proved successful. In 1991, as the country was mired in an economic downturn, Wal-Mart increased sales by more than 40 percent. But that success also made Wal-Mart a target, especially for small-town merchants and other residents who argued the giant chain was wiping out a communitys smaller stores and downtown retail. Walton, however, tried to meet those fears head-on, promising jobs and donations to local charities, which the company often delivered in some fashion.

INTRODUCTION TO WALMART:

Wal-Mart Stores, Inc branded as Walmart, is an American multinational retailer

corporation that runs chains of large discount department stores and warehouse stores. The company is the world's third largest public corporation, according to the Fortune Global 500 list in 2012. It is also the biggest private employer in the world with over two million employees, and is the largest retailer in the world Walmart remains a family-owned business, as the company is controlled by the Walton family who own a 48% stake in Walmart. It is also one of the world's most valuable companies

The company was founded by Sam Walton in 1962, incorporated on October 31, 1969, and publicly traded on the New York Stock Exchange in
1972. It is headquartered in Bentonville, Arkansas Walmart is also the largest grocery retailer in the United States. In 2009, it generated 51% of its US$258 billion sales in the U.S. from grocery business. It also owns and operates the Sam's Club retail warehousesin North America. Walmart has 8,500 stores in 15 countries, under 55 different names. The company operates under the Walmart name in the United States, including the 50 states and Puerto Rico. It operates in Mexico as Walmex, in the United Kingdom as Asda, in Japan as Seiyu, and in India as Best Price. It has wholly owned operations in Argentina, Brazil, and Canada. Walmart's investments outside North America have had mixed results: its operations in the United Kingdom, South America and China are highly successful, whereas ventures in Germany and South Korea were unsuccessful.

PRODUCTS OFFERED BY WALMART:

Walmart U.S. does business in six merchandise units, including grocery, entertainment, health and wellness, apparel and home, across a range of store formats, including supercenters, discount stores, Neighborhood Markets and other small store formats. Grocery consists of a range of grocery items, including meat, produce, deli, bakery, dairy, frozen foods, alcoholic and nonalcoholic beverages, floral and dry grocery, as well as consumables, such as health and beauty aids, baby products, household chemicals, paper goods and pet supplies. Entertainment contains electronics, toys, cameras and supplies, photo processing services, cellular phones, cellular service plan contracts and prepaid service and books. Hardlines consist of stationery, automotive accessories, hardware and paint, sporting goods, fabrics and crafts and seasonal merchandise. Health and wellness includes pharmacy and optical services.

Apparel includes apparel for women, girls, men, boys and infants, shoes, jewelry and accessories. Home includes home furnishings, housewares and small appliances, bedding, home decor, outdoor living and horticulture. The Walmart U.S. segment also offers financial services and related products, including money orders, wire transfers, check cashing and bill payment. It also markets a range of merchandise under its private-label store brands, including Canopy, Equate, Everstart, Faded Glory, George, Great Value, Hometrends, Mainstays, Marketside, No Boundaries, Ol Roy, Ozark Trail, Parents Choice, Prima Della, Puritan, Spring Valley and White Stag. The Company also markets lines of merchandise under licensed brands, which include Better Homes & Gardens, Danskin Now, Disney, General Electric, Just My Size, OP, Rival and Starter. It accepts a range of payment methods, including cash, check, debit and credit cards, electronic benefits transfer cards, a private-label store credit card issued by a third-party provider and online payments through PayPal. In addition, its pharmacy and optical departments accept payments for products and services through its customers health benefit plans.

WALMART CORPORATE MISSION:

The corporate mission of Wal-Mart can be stated as follows: As Wal-Mart continues to grow into new areas and new mediums, our success will always be attributed to our culture. Whether you walk into a Wal-Mart store in your hometown or one across the country while youre on vacation, you can always be assured youre getting low prices and that genuine customer service youve come to expect from us. Youll feel at home in any department of any storethats our culture. The company has three Basic Beliefs or core philosophies Sam Walton built the company on. Those beliefs are: (1) Respect for the Individual, (2) Service to Our Customers, and (3) to Strive for Excellence. Respecting the individual is a call for treating their employees well and pushing them to excel in what they do. The commitment to their customers is a goal whereby the stores respect a pricing philosophy to always sell items as low as they can while providing excellent customer service. The third belief is to strive for excellence, that is, to expand the store, innovate or reach further in to new markets and to grow. Other beliefs include, exceeding customer expectations with aggressive hospitality such as using door greeters. The store also features patriotic display

and themes in its US stores. Another goal for the company is to support efforts in the local community via charitable contributions. Wal-Mart identifies several affiliations with charities such as the United Way and the Childrens Miracle Network.

Operating divisions:
Walmart's operations are organized into three divisions: Walmart Stores U.S., Sam's Club , and Walmart International. The company does business in nine different retail formats: supercenters, food and drugs, general merchandise stores, bodegas (small markets), cash and carry stores, membership warehouse clubs, apparel stores, soft discount stores and restaurants

Walmart Stores U.S:

Walmart discount store

Walmart supercenter

Walmart Stores U.S. is the company's largest division, accounting for $258 billion, or 63.8% of total sales for financial year 2010. It consists of three retail formats that have become commonplace in the United States: Discount Stores, Supercenters, and Walmart Markets. The retail department stores sell a variety of mostly non-grocery products, though emphasis has now shifted towards supercenters, which include more grocery items. This division also includes Walmart's online retailer

Sam's Club:
Sam's Club is a chain of warehouse clubs which sell groceries and general merchandise, often in large quantities. Sam's Club stores are "membership" stores and most customers buy annual memberships. However, nonmembers can make purchases either by buying a one-day membership or paying a surcharge based on the price of the purchase. Some locations also sell gasoline. The first Sam's Club opened in 1983 in Midwest City, Oklahoma under the name "Sam's Wholesale Club". Sam's Club has found a niche market in recent years as a supplier to small businesses. All Sam's Club stores are open early hours exclusively for business members and their old slogan was "We're in Business for Small Business." Their current slogan is "Savings Made Simple" as Sam's Club attempts to attract a more diverse member base

Walmart International:
Walmart's international operations currently comprise 4,263 stores and 660,000 workers in 15 countries outside the United States. There are wholly owned operations in Argentina, Brazil, Canada, and the UK. With 2.1 million employees worldwide, the company is the largest private employer in the US and Mexico, and one of the largest in Canada. In the financial year 2010, Walmart's international division sales were $100 billion, or 24.7% of total sales

THE UNDERLYING STRENGTHS OF WALMART:

Distribution Centers:
Walmarts 158 distribution centers are hubs of activity for our business. Our distribution operation is one of the largest in the world. Walmart logistics has a fleet of 6,500 tractors, 55,000 trailers and more than 7,000 drivers.

A regional distribution center can have up to 12 miles of conveyor belts, which can move hundreds of thousands of cases through the facility each day. There are 9 disaster distribution centers, strategically located across the country and stocked to provide rapid response to struggling communities in the event of a natural disaster. Each distribution center is more than 1 million square feet in size, and uses more than 5 miles of conveyor belts to keep products moving to our stores 24 hours a day. Every distribution center supports 90 to 100 stores in a 200-mile radius.

Cross docking:

Cross-docking is a practice in logistics of unloading materials from an incoming semi-trailer truck or railroad car and loading these materials

directly into outbound trucks, trailers, or rail cars, with little or no storage in between. This may be done to change type of conveyance, to sort material intended for different destinations, or to combine material from different origins into transport vehicles (or containers) with the same, or similar destination. Wal-Mart began utilizing cross-docking in the retail sector in the late 1980s wherein most goods pass through the warehouses within a span of 48 hours, enabling minimum idle time and lowering excess inventory possibilities. Most of the goods never touch the floor of the warehouse, as goods are passed on 24 miles length of conveyor belts between incoming trucks to outgoing trucks. . Use of technology:

RFID tag inside a regular adhesive label

Wal-Mart pushed the retail industry to establish the universal bar code, which forced manufacturers to adopt common labeling. The bar allowed retailers to generate all kinds of information creating a subtle shift of power from manufacturers to retailers. Wal-Mart became especially good at exploiting the information behind the bar code and is considered a pioneer in developing sophisticated technology to track its inventory and cut the fat out of its supply chain. Wal-Mart became the first major retailer to demand manufacturers use Radio Frequency Identification Technology (RFID). The technology uses radio frequencies to transmit data stored on small tags attached to pallets or individual products. RFID tags hold significantly more data than bar codes. During the first eight months of 2005, Wal-Mart experienced a 16 percent drop in out-of-stock merchandise at its RFID-equipped stores.

Customer service:

It has developed a culture where employees are expected to think out of the box and provide customers with excellent service. Therefore it is just not following operational excellence but building relations with customers which today is the key to any organizations success. The Sundown Rule is a corporate directive whereby all Wal-Mart employees, be they store associates, management, or corporate staff, must reasonably answer a customers or supplier request or question within 24 hours. The Ten Foot Rule states that store employees must greet, smile, and attend to a customer in a store when within 10 feet of them. Its a type of aggressive hospitality policy. Wal-Mart also compels its staff to engage in morning cheers where they recite company sayings.

Everyday low price ("EDLP"):

It is a pricing strategy promising consumers a low price without the need to wait for sale price events or comparison shop. EDLP saves retail stores the effort and expense needed to mark down prices in the store during sale events, and to market these events; and is believed to generate shopper loyalty.It was successfully used by Walmart. It was noted in 1994 that Wal-Mart retail chain after using EDLP strategy, would buy "feature advertisements" in newspapers on a monthly basis, while its competitors would advertise 52 weeks per year.

Strong distribution network:

Wal-Mart has developed a strong logistics and distribution network and following the hurricane Katrina it was able to supply its stores with products quickly when other stores were out of stock for many items.Wal-Mart maintains its own fleet of 3000 plus trucks and 12,000 trailers and a skilled staff of truck drivers which have scheduled deliveries between warehouses to stores minimizing delays and over reliance from suppliers Theyre part of one of the largest and safest fleets, and every year they drive 700 million miles to make millions of deliveries to stores and clubs Wal-Mart had implemented a satellite network system that allowed information to be

shared between the companys wide network of stores, distribution centers, and suppliers. The system consolidated orders for goods, enabling the company to buy full truckload quantities without incurring the inventory costs. Operational excellence: The philosophy behind operational excellence is high expectations. High expectations lead to high productivity, high productivity means efficient processes, efficient processes means lower costs. These lower costs mean more profits and savings which enable it to open more stores making it more financially stable and enabling it to achieve economies of scale. Greater scale in turn means lower prices which are then passed on to the consumers.

Cutting costs and saving expenses: Wal-Mart tries to cut costs out of their operations such as distribution centers, home office, fleet etc. When the sales are not high, expenses are also controlled and managers are not hesitant to even cut their own hours. The culture is driven from the top and the top management sets example for others to follow. The philosophy of saving expenses is very much embedded in employees and they realize that a dollar foolishly spent drives the money out of the customers pocket. Thus operations are handled in a way to save every possible penny which leads to saving dollars and ultimately results in providing items at low cost to consumers.